Righthaven reeling: secret doc could doom a copyright troll

If a company's entire business model is predicated on bringing copyright infringement lawsuits, you might expect that company to make sure it actually has the right to sue first. But a newly unsealed court document casts some doubt on Righthaven's rights; defense attorneys are already using the new document to say that Righthaven cases are a "sham" and are "invalid."

And Righthaven's moves to keep this document secret have angered the judge in the case, who ripped into Righthaven in spectacular fashion last Thursday as he unsealed the document.

"The use of phrases, in the Motion to Strike, such as 'underhanded,' 'a ruse,' 'blatantly ignored,' 'brazen attempt,' 'fumbling attempt,' 'purposefully muddle,' and 'complaint reeks of hypocrisy,' is a very unprofessional attempt to attack counsel rather than address the issues," wrote the judge. "There is an old adage in the law that, if the facts are on your side, you pound on the facts. If the law is on your side, you pound on the law. If neither the facts nor the law is on your side, you pound on the table. It appears there is a lot of table pounding going on here."

In a separate order, the same judge last week wrote, "Righthaven and Stephens Media have attempted to create a cottage industry of filing copyright claims, making large claims for damages and then settling claims for pennies on the dollar, with defendants who do not want to incur the costs of defending the lawsuits, are now offended when someone has turned the tables on them and insisting on a judgment in their favor rather than a simple dismissal of the lawsuit."

Still, leaving aside questions of ethics and tactics, it was widely assumed that Righthaven actually had the standing to sue. After Righthaven's Strategic Alliance Agreement was unsealed in a Nevada federal court last week, however, defense attorneys have savaged the company, saying that its copyrights are a "sham" and are "invalid." Lawyers in several different cases have already moved for dismissals and fees.

The Strategic Alliance Agreement describes the relationship between Righthaven and Stephens Media, publisher of many local newspapers including the Las Vegas Review-Journal. Stephens Media was Righthaven's first customer and helped start the operation; this Strategic Alliance Agreement apparently underlies most of the cases Righthaven has filed to date (more recently, it has expanded work to include papers like the Denver Post). Righthaven generally searches for possible online infringement, licenses the relevant newspaper content, then files suit.

A beatdown, federal judge style

The agreement was revealed (late) during discovery in a Righthaven lawsuit against Democratic Underground. Righthaven is currently attempting to dismiss the suit, but Democratic Underground lawyers won't let them, asking instead for the court to first rule on the issue of fair use in the case. Righthaven has repeatedly tried to dismiss lawsuits that weren't going well rather than let them come to judgment.

The agreement describes a 50/50 revenue split between Righthaven and Stephens Media. In addition, the agreement appears to give Righthaven only the right to sue over the story or photograph at issue, but not to exploit it in any other way. Past court cases have ruled that companies cannot bring copyright suits unless they control one of the "exclusive rights" enumerated in the Copyright Acts, rights including copying, distribution, public performance, etc. The "right to sue" is not among them.

"Righthaven has been conveyed no rights in the work at issue other than the right to sue for infringement,” argue Democratic Underground's lawyers, "a fact that renders the assignment to Righthaven invalid."

The lawyers also note that the “sham and unenforceable nature of the assignments to Righthaven” could affect “hundreds of cases now improperly pending in this District.”

The Strategic Alliance Agreement also suggested that Stephens Media was in the driver's seat. Stephens could send a “declination notice” to Righthaven in order to have it halt any lawsuit, even after the rights to a particular work had been assigned to Righthaven. In addition, Stephens could terminate a copyright assignment to Righthaven at any time.

In the view of defense lawyers, all of this is significant because it suggests that Stephens Media is actually in control of the litigation and that Righthaven is merely acting as its agent. If courts accept this argument, then Stephens Media could be dragged into cases as the "real party of interest."

Defense lawyers in other Righthaven cases have already pounced. Last night, for instance, a lawyer handling two such cases filed motions to dismiss, saying, "This document clearly reveals that Righthaven lacked the rights to bring this suit, and thus this court lacks jurisdiction over this matter." Expect a flood of similar filings this week.

Update: Righthaven has responded to our request for comment, telling Ars, "We completely disagree with DU's position and will be responding to the Court accordingly."